United States General Accounting Office

GAO Briefing Report to Congressional

Requesters

September 1996 DEFENSE ACQUISITION

INFRASTRUCTURE

Changes in RDT&E

Laboratories and Centers

G O A

years

1921 - 1996

GAO/NSIAD-96-221BR

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-272643 

September 13, 1996

The Honorable John R. Kasich

Chairman, Committee on the Budget

House of Representatives

The Honorable William S. Cohen

Chairman, Subcommittee on Oversight of

 Government Management and

 the District of Columbia

Committee on Governmental Affairs

United States Senate

As requested, we reviewed the Department of Defense’s (DOD) research,

development, test, and evaluation (RDT&E) infrastructure. Specifically, we

(1) reviewed previous studies on DOD’s laboratory infrastructure to

determine what actions DOD has taken to implement prior

recommendations and (2) analyzed data on RDT&E infrastructure funding,

workforce composition, and operating cost. On June 6 and June 25, 1996,

we briefed your staffs on the results of our review. This report summarizes

and updates the information presented at the briefings. It also provides

our preliminary examination of lessons learned from successful

consolidations that may be applicable to the federal laboratory

infrastructure and will be the subject of a later report.

Background Future spending increases for readiness and weapons modernization will

have to come, in part, from infrastructure reduction savings, according to

the Secretary of Defense. The combination of the operations and

maintenance (O&M) and military personnel appropriations fund about

80 percent of DOD’s total infrastructure activities. Thus, if DOD as a whole is

to achieve significant infrastructure savings for future force

modernization, then most of the savings must come from these two

accounts.1

A segment of this infrastructure is comprised of a diverse network of

laboratories and test and evaluation centers. The laboratories and centers

are funded partly by the O&M account and, according to DOD officials, to a

greater extent by the RDT&E and procurement accounts. In fiscal year 1994,

DOD spent more than $22 billion—about 8 percent of its $266 billion budget

1

The funding for 80 percent of DOD’s infrastructure activities is what we could clearly identify in the

Future Years Defense Program—DOD’s long-term financial plan. See also Defense Infrastructure:

Costs Projected to Increase Between 1997 and 2001 (GAO/NSIAD-96-174, May 31, 1996).

Page 1 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
B-272643 

for fiscal year 1994—through 55 military service research, development,

engineering, test, and evaluation laboratories and centers worldwide on

both in-house and outsourced activities. These organizations employ a

workforce of almost 115,000 personnel, including about 95,000 civilian and

20,000 military, although these totals are expected to decrease.

Over the years, DOD’s definition of its laboratory and center infrastructure

has been a matter of debate. DOD currently defines a research and

development (R&D) laboratory as any DOD activity that performs one or

more of the following functions: science and technology, engineering

development, systems engineering, and engineering support of deployed

materiel and its modernization. DOD defines a test and evaluation (T&E)

center as any facility or capability used to collect data for T&E. Finally,

infrastructure is generally defined as mission-supporting property, plant,

equipment, and personnel, including contractor manpower. DOD excludes

from this definition the equipment and personnel necessary to perform

directly critical technical and acquisition functions.

Results in Brief Studies of DOD’s laboratories and centers have reported excess capacity,

but generally have made recommendations focusing on management

efficiencies rather than infrastructure reductions. Since 1988, the base

realignment and closure (BRAC) process has been the primary vehicle for

laboratory and center infrastructure reductions. However, despite four

BRAC rounds, reductions in DOD’s infrastructure have not kept pace with

reductions in its funding, personnel, and force structure levels. According

to DOD officials, after all current BRAC actions have been completed, DOD’s

laboratory infrastructure still will have an excess capacity of

approximately 35 percent.

Officials believe that DOD lost opportunities in the BRAC 1995 process to

reduce laboratory infrastructure by splitting the analysis of R&D

laboratories and T&E centers and because each service tried to protect its

own facilities instead of adopting cross-service efficiencies. Some DOD

officials and others have suggested that additional BRAC rounds are needed

to reduce further defense infrastructure.

Since fiscal year 1990, laboratory funding has been increasing. In contrast

to reductions in DOD’s overall O&M, procurement, and RDT&E funding since

fiscal year 1990, the same accounts have been rising for its laboratories

and centers. These increases are due largely to the Navy’s reorganization

of its RDT&E establishment and an increased laboratory responsibility for

Page 2 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
B-272643 

logistics and program management by all of the services. In addition, the

services increasingly are dependent on private sector laboratory

infrastructure. From fiscal years 1991 to 1994, laboratories and centers

increased their outsourced funding and sent roughly 50 percent of the

$22 billion spent in fiscal year 1994 to the private sector.

Limitations in the data available make it difficult for DOD to analyze fully

trends in DOD’s R&D laboratory and T&E center infrastructure. First, each

service has its own distinct laboratory and center organizational structure.

Second, a significant discrepancy in data available about the laboratory

workforce prevents an analysis of trends in workforce composition. Third,

because each service has its own financial system to support unique

organizational structures, management approaches, and cultures, DOD has

multiple systems reporting disparate elements.2

 Finally, as a result of these

factors, DOD is unable to determine the true cost of operating its laboratory

and center infrastructure.3

As part of an ongoing study of successful RDT&E infrastructure

consolidations, we are reviewing laboratory and center infrastructure

reductions undertaken by the United Kingdom and private industry in the

United States. British government officials and private industry

representatives said that to consolidate their RDT&E infrastructure, they

needed clearly defined, comparable terms for RDT&E organizations and

their infrastructure elements; accurate, reliable, and comparable financial

data, such as operating costs and overhead; and accurate and reliable data

about the composition of the workforce.

Agency Comments We provided DOD officials with a draft of this report. DOD concurred fully

with the information contained in this report. We incorporated their oral

comments, as appropriate.

Scope and

Methodology

We reviewed studies conducted between fiscal years 1987 and 1996 on

DOD’s laboratory and center infrastructure. These studies were directed by

the Congress, conducted by the defense base closure and realignment

commissions and the Office of Science and Technology Policy, or initiated

by DOD. We then reviewed our list of studies with the Office of the

2

See High Risk Series: An Overview (GAO/HR-95-1, Feb. 1995).

3

DOD officials said that they are in the process of hiring an outside consultant to assist them in

determining the true cost of operating DOD’s RDT&E infrastructure. They currently estimate the total

annual costs for operations and program management to be about $11.5 billion.

Page 3 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
B-272643 

Director, Defense Research and Engineering, which identified those

studies and recommendations still under consideration or being

implemented by DOD.

We analyzed data on RDT&E infrastructure funding, workforce composition,

and operating cost. DOD funding data comes from the National Defense

Budget Estimates for Fiscal Year 1996. As we note in briefing section II,

accurate or comprehensive data on the cost and composition of DOD’s

RDT&E community does not exist. We obtained the best available data on

laboratory funding, operating cost, and general workforce composition

from DOD’s in-house RDT&E activities management analysis reports for

fiscal years 1990 through 1994, the most recent years for which data are

available. We did not attempt to verify the accuracy of the data, which

provided relative comparison among the various RDT&E activities. All

funding data are presented in 1996 constant dollars except for data in

appendix I, which are presented in current-year dollars.

To examine the composition of DOD’s laboratory and center workforce in

greater detail, we obtained data from the Defense Manpower Data Center

on military and civilian employment levels from fiscal years 1990 to 1994

stratified by organization, occupational series, and management levels.

However, we found a significant discrepancy of more than 40,000

personnel between the Defense Manpower Data Center’s 1994 data set and

the Department of Defense In-House RDT&E Activities Management

Analysis Report for Fiscal Year 1994. Therefore, we were unable to analyze

in detail the composition of the laboratory and center workforce. We

reported the discrepancy to DOD, which is taking action to correct it.

To review methodologies used in consolidations of RDT&E infrastructure

outside the U.S. government, we interviewed representatives from the

Boeing Defense and Space Group in Seattle, Washington, and officials at

the British Embassy in Washington, D.C.

We also visited the Naval Command, Control and Ocean Surveillance

Center in San Diego, California; the Army Research Laboratory in Adelphi,

Maryland; the U.S. Army Engineer Waterways Experiment Station in

Vicksburg, Mississippi; and the Air Force’s Wright Laboratory at

Wright-Patterson Air Force Base, Ohio. In addition, we interviewed

officials from the Laboratory Quality Improvement Program-Financial

Subpanel.

Page 4 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
B-272643 

We performed our review from November 1995 through July 1996 in

accordance with generally accepted government auditing standards.

As arranged with your staff, unless you publicly announce its contents

earlier, we plan no further distribution of this report until 30 days from its

issue date. At that time, we will send copies to the Secretaries of Defense,

the Army, the Navy, and the Air Force, and to other interested

congressional committees. We will also make copies available to other

interested parties upon request.

Please contact me at (202) 512-4383 if you or your staff have any questions

concerning this report. Major contributors to this report are listed in

appendix II.

Katherine V. Schinasi

Associate Director, Defense Acquisitions Issues

Page 5 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
Contents

Letter 1

Briefing Section I 

Previous

Infrastructure Studies

and

Recommendations

8

DOD Reductions Since Fiscal Year 1985 8

Significant Excess Capacity Remains in DOD Laboratories 10

Significant Excess Capacity Remains in DOD Laboratories 12

Results of Previous DOD Laboratory Studies 14

Vision 21: DOD’s Response to the President and the Congress 16

Future Laboratory Infrastructure Reduction 18

Need for Another Round of Base Closures 20

Briefing Section II 

Trends in Cost, Size,

and Composition of

DOD’s R&D

Laboratory and T&E

Center Infrastructure

22

Limitations to Analysis of Trends in RDT&E Infrastructure 22

Required Components for Streamlining Infrastructure 24

Significant Differences Exist Between Services’ Laboratory

Structures

26

Divergent Trends in Three Budget Accounts for DOD and Service

Laboratories/Centers

28

Trends in Laboratory Total Obligational Authority 30

Breakout of Laboratory and Center RDT&E Funding 32

Percentage of Total Laboratory Funding Dollars Outsourced 34

Appendix I 

DOD Focus on Prior

Laboratory Studies

36

Appendix II 

Major Contributors to

This Report

39

Abbreviations

BRAC base realignment and closure

DOD Department of Defense

NSTC National Science and Technology Council

O&M operations and maintenance

OSTP Office of Science and Technology Policy

R&D research and development

RDT&E research, development, test, and evaluation

T&E test and evaluation

Page 6 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
Page 7 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
Briefing Section I 

Previous Infrastructure Studies and

Recommendations

GAO DOD Reductions Since Fiscal Year 1985

0

10

20

30

40

50

39

32

30

21

Percent

Funding Personnel Force structure Infrastructure

Source: DOD and the 1995 Defense Base Closure and Realignment Commission.

Page 8 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
Briefing Section I 

Previous Infrastructure Studies and

Recommendations

Numerous studies in recent years have concluded that the Department of

Defense’s (DOD) infrastructure is too large and too costly. Further,

reductions in infrastructure lagged behind reductions in funding,

personnel, and force structure. According to the Secretary of Defense,

future increases in spending for readiness and weapons modernization will

have to come from (1) an increase in DOD’s budget over the next 5 years,

(2) infrastructure reduction savings, and (3) acquisition reforms. The

Secretary of Defense said if DOD cannot significantly increase the amount

of money available for long-term readiness and force modernization, then

it will need to reduce force structure and thus revise the current national

military strategy based on the ability to fight two near-simultaneous major

regional conflicts.

Despite four rounds of base realignments and closures (BRAC) in 1988,

1991, 1993, and 1995, DOD’s infrastructure reductions have not kept pace

with reductions in funding, personnel, and force structure. Since fiscal

year 1985, the defense budget has declined by 39 percent. Moreover,

military and civilian personnel levels are expected to be reduced by up to

32 percent in the next several years. Overall, DOD has reduced the size of

the military service force structure by 30 percent. However, the cumulative

reduction of the four BRAC rounds will reduce domestic base infrastructure

by only 21 percent. In fact, when BRAC 1995 is implemented fully by 2001,

significant excess capacity will remain in DOD’s infrastructure.

DOD officials noted that DOD’s laboratory and test and evaluation (T&E)

infrastructure remained relatively flat while funding, personnel, and force

structure increased sharply during the early to mid-1980s. They contended

it is not clear that DOD’s research, development, test, and evaluation

(RDT&E) infrastructure reductions should necessarily keep pace with

reductions in funding, personnel, and force structure. Although

infrastructure reductions often lag behind reductions in these other

categories, DOD officials said infrastructure needs must be based on

requirements rather than tied to other budget reductions.

Page 9 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
Briefing Section I 

Previous Infrastructure Studies and

Recommendations

GAO Significant Excess Capacity Remains 

in DOD Laboratories

BRAC 1995 left 35% excess capacity in 

DOD's laboratory infrastructure

DOD lost opportunities in the BRAC 

1995 process to reduce laboratory 

infrastructure

Splitting RDT&E analysis into two 

groups created artificial barriers

R&D laboratories and T&E facilities 

were reviewed independently using 

different methodologies

Page 10 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
Briefing Section I 

Previous Infrastructure Studies and

Recommendations

According to DOD Laboratory Joint Cross-Service Group officials, who

were an integral part of the BRAC 1995 process, DOD’s laboratory

infrastructure has excess capacity of approximately 35 percent.

Officials believe that DOD lost opportunities in the BRAC 1995 process to

reduce laboratory infrastructure. DOD’s decision in 1993 to split its analysis

of research and development (R&D) laboratories and T&E centers into two

groups created artificial barriers around the functions and facilities that

each could consider, since the mission and location of laboratories and

T&E facilities are often interrelated. Thus, in 1995, R&D laboratories and T&E

facilities subsequently were reviewed independently using different

methodologies.

Page 11 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
Briefing Section I 

Previous Infrastructure Studies and

Recommendations

GAO Significant Excess Capacity Remains 

in DOD Laboratories (Cont.)

Services protected own facilities

Services did not adopt scenarios to 

reduce excess T&E infrastructure

Services could not agree on 

realignments or closures

Little laboratory joint cross-servicing 

occurred

Lack of comparable definitions and data

Page 12 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
Briefing Section I 

Previous Infrastructure Studies and

Recommendations

During the BRAC 1995 process, each of the services tried to protect its own

facilities, which undermined the BRAC process. Although the services made

some reductions, they did not adopt scenarios and the corresponding

reduced costs that could have eliminated excess T&E infrastructure.

The military services could not agree on realignments or closures. Even in

those areas where there was policy agreement,1

 they were unwilling to

collocate or rely on each other. As a result, little joint cross-servicing

occurred in BRAC 1995. According to the Director, Defense Research and

Engineering, the final results from the Laboratory Joint Cross-Service

Group were “disappointing and unbalanced.” Scenarios were not

developed to implement potential interservicing alternatives and

interservicing did not occur.

Finally, the lack of comparable definitions of laboratories and centers, as

well as their infrastructure elements and the lack of accurate, reliable, or

comparable data made it difficult for DOD and the 1995 Defense Base

Closure and Realignment Commission to analyze potential facilities for

closure and realignment.

1

For example, DOD policy was to make maximum use of common support assets. Various commands

perform both laboratory and T&E functions. Thus, many buildings and facilities are used for both

purposes. DOD components were instructed to look for cross-service or intraservice opportunities to

rely on a single military department for support. Moreover, Deputy Secretary of Defense guidance for

the BRAC 1995 process stated, in part, that DOD components and joint cross-service groups should,

where operationally and cost-effective, strive to retain in only one service militarily unique capabilities

used by two or more services, and consolidate workload across the services to reduce capacity.

Page 13 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
Briefing Section I 

Previous Infrastructure Studies and

Recommendations

GAO Results of Previous DOD Laboratory 

Studies

Since 1988, the BRAC process has been 

the primary vehicle for laboratory 

infrastructure reductions

DOD is implementing prior 

recommendations from previous 

studies

New presidential and congressional 

direction given to reduce infrastructure

Page 14 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
Briefing Section I 

Previous Infrastructure Studies and

Recommendations

Our analysis of dozens of previous studies shows that since 1988, the BRAC

process has been the primary vehicle for laboratory and center

infrastructure reductions. In the past, the services reduced the size of their

laboratory infrastructure through force structure reductions. During the 

20 years prior to BRAC 1988, the military departments consolidated and

reduced their laboratory infrastructure by various means. However,

between 1988 and 1995, by law, all installations with more than 

300 personnel were required to go through the BRAC process. Most

laboratories and centers met this threshold. The services reported that

cross-service alternatives are more costly or less supportive of their

objectives than in-service alternatives. Although limited, according to the

Secretary of Defense, the joint cross-service effort did help DOD reduce

capacity and determine where joint or collocated functions made

functional or economic sense.

Currently, DOD is implementing prior recommendations from several

previous studies.2 DOD also is implementing presidential and congressional

direction to reduce further, consolidate, and restructure DOD laboratory

and center infrastructure. This direction is included in the Office of

Science and Technology Policy (OSTP)/National Science and Technology

Council (NSTC) Interagency Federal Laboratory Review Final Report

(1995) and section 277 of the National Defense Authorization Act for

Fiscal Year 1996. These reports and direction are discussed in appendix I.

2

These studies include the Report of the Defense Science Board 1987 Summer Study on Technology

Base Management; Institute for Defense Analyses Long-Term Modernization of Research,

Development, Test and Evaluation (RDT&E) Facilities (1991); Base Realignments and Closures:

Report of the Defense Secretary’s Commission (1988); and Defense Base Closure and Realignment

Commission 1991 Report to the President, 1993 Report to the President, and 1995 Report to the

President.

Page 15 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
Briefing Section I 

Previous Infrastructure Studies and

Recommendations

GAO Vision 21: DOD's Response to the 

President and the Congress

OSTP/NSTC report directed DOD to 

submit a report to the President detailing 

its plans and schedules for downsizing 

DOD laboratories

The Secretary of Defense is required by 

law to develop a 5-year plan to 

consolidate and restructure DOD 

laboratories and T&E centers

Vision 21 report is DOD's plan to 

develop an action plan by July 1998

Page 16 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
Briefing Section I 

Previous Infrastructure Studies and

Recommendations

The OSTP/NSTC’s report, entitled Interagency Federal Laboratory Review

Final Report (May 15, 1995), directed DOD to submit a report to the

President by February 15, 1996, detailing plans and schedules for

downsizing DOD laboratories. The report was required to include

opportunities to increase efficiency through cross-service integration and

service laboratory consolidations. It subsequently was delayed to combine

it with a report directed by the Congress.

Section 277 of the National Defense Authorization Act for Fiscal Year 1996

directed the Secretary of Defense to develop a 5-year plan to consolidate

and restructure DOD’s laboratories and centers. The objective is for the

Secretary to specify the actions needed to consolidate the laboratories and

centers into as few facilities as practical and possible, by October 1, 2005.

The Secretary was required to submit a report on the plan to the

congressional defense committees by May 1, 1996.

DOD consolidated its response to the President and the Congress in its

Vision 21 report. It was submitted to the congressional defense

committees and to OSTP in May 1996. This report summarizes reductions

already made in DOD laboratory and center infrastructure through the BRAC

processes as well as DOD’s plan for its laboratories and T&E centers for the

21st century. The report outlines how DOD will develop a detailed plan by

July 1998.

Page 17 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
Briefing Section I 

Previous Infrastructure Studies and

Recommendations

GAO Future Laboratory Infrastructure 

Reduction

One Vision 21 option is to reduce 

laboratory and T&E infrastructure each by 

at least 20 percent beyond BRAC 1995

DOD's intent is to baseline consolidation 

and downsizing efforts on all 

BRAC-related actions plus non-BRAC 

actions as of May 1996

Unclear what further laboratory 

infrastructure reductions will be achieved

Page 18 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
Briefing Section I 

Previous Infrastructure Studies and

Recommendations

The Vision 21 report states that one option DOD will consider is reducing

DOD’s laboratory and T&E infrastructure each by at least 20 percent beyond

the BRAC 1995 recommendations. DOD considers the completion of all

BRAC-related actions and non-BRAC-related actions occurring as of May 1,

1996, as its baseline for Vision 21. It is unclear what further laboratory

infrastructure reductions will be achieved.

Page 19 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
Briefing Section I 

Previous Infrastructure Studies and

Recommendations

GAO

Secretary of Defense suggested an 

additional round of closures in 3 to 4 

years after DOD has absorbed effects of 

closures from prior rounds

Chairman, JCS sees need for additional 

base closing authority in the future

Under Secretary of Defense (A&T) said 

DOD likely will request next year that 

Congress authorize several more rounds 

of base closure and realignment

Need for Another Round of Base 

Closures

Note: JCS is the Joint Chiefs of Staff and A&T is Acquisition and Technology.

Page 20 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
Briefing Section I 

Previous Infrastructure Studies and

Recommendations

The Secretary of Defense told the 1995 Defense Base Closure and

Realignment Commission that DOD still will have excess infrastructure

even after BRAC 1995 actions have been completed. Several DOD officials

suggested that one option to reduce the defense infrastructure is to

undertake an additional round of base closures and realignments. In

particular, the Secretary suggested another BRAC round in 3 to 4 years,

after DOD absorbed the effects of all previous BRAC rounds. The Chairman

of the Joint Chiefs of Staff said that excess capacity would remain in DOD

after BRAC 1995. The Chairman agreed with the Secretary of Defense on the

need for additional base closing authority in the future and said

opportunities remain in DOD to increase cross-servicing. The Under

Secretary of Defense for Acquisition and Technology said that, in his

opinion, given the pressures to achieve an enormous increase in

modernization funding in coming years, DOD is likely in fiscal year 1997 to

request that the Congress authorize several more BRAC rounds, including a

specific focus on laboratories.

Page 21 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
Briefing Section II 

Trends in Cost, Size, and Composition of

DOD’s R&D Laboratory and T&E Center

Infrastructure

GAO Limitations to Analysis of Trends in 

RDT&E Infrastructure

Distinct service laboratory and center 

organizational structures

Discrepancy in laboratory and center 

workforce data

Unique service financial systems report 

disparate elements

DOD unable to determine true cost of 

operating laboratory and center 

infrastructure

Page 22 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
Briefing Section II 

Trends in Cost, Size, and Composition of

DOD’s R&D Laboratory and T&E Center

Infrastructure

Limitations in the data available make it difficult for DOD to analyze fully

trends in DOD’s R&D laboratory and T&E center infrastructure. First, each

service has its own distinct laboratory and center organizational structure.

Second, a significant discrepancy in data available about the laboratory

workforce prevents an analysis of trends in workforce composition. Third,

because each service has its own financial system to support unique

organizational structures, management approaches, and cultures, DOD has

multiple systems reporting disparate elements. Finally, as a result of these

factors, DOD is unable to determine the true cost of operating its laboratory

and center infrastructure.

Page 23 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
Briefing Section II 

Trends in Cost, Size, and Composition of

DOD’s R&D Laboratory and T&E Center

Infrastructure

GAO Required Components for Streamlining 

Infrastructure

Two common elements present in 

effective RDT&E infrastructure 

consolidation efforts

Clearly defined, comparable terms for 

RDT&E organizations and their 

infrastructure elements

Accurate, reliable, or comparable 

data

DOD has neither

Page 24 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
Briefing Section II 

Trends in Cost, Size, and Composition of

DOD’s R&D Laboratory and T&E Center

Infrastructure

As part of an ongoing study of successful RDT&E infrastructure

consolidations, we are reviewing laboratory and center infrastructure

reductions undertaken by the United Kingdom and private industry in the

United States. According to British government officials and private

industry representatives, their consolidations were enhanced by clearly

defined, comparable terms for RDT&E organizations and their infrastructure

elements. They said they also benefited from accurate, reliable, and

comparable financial data, such as operating costs and overhead, as well

as accurate and reliable data about the composition of the workforce.

In contrast, DOD officials said that they do not know the true cost of

operating much of their RDT&E infrastructure.1

 Because each service has its

own financial system to support unique organizational structures,

management approaches, and cultures, DOD has multiple financial systems

reporting on a wide variety of elements. Thus, disparate financial data, as

well as DOD’s various definitions for laboratories and centers, makes it

difficult to compare the services’ RDT&E organizations across DOD.

1

DOD officials said that they are in the process of hiring an outside consultant to assist them in

determining the true cost of operating DOD’s RDT&E infrastructure. They currently estimate the total

annual costs for operations and program management to be about $11.5 billion.

Page 25 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
Briefing Section II 

Trends in Cost, Size, and Composition of

DOD’s R&D Laboratory and T&E Center

Infrastructure

GAO Significant Differences Exist Between 

Services' Laboratory Structures

Air Force Navy Army

Organization and 

composition

Four R&D laboratories 

with separate T&E centers 

and engineering support 

in product centers

Single corporate laboratory 

and four full life-cycle 

warfare centers

Three largely 

independent 

laboratory 

structures: Army 

Materiel Command/ 

Army Corps of 

Engineers/Medical

Financing Direct funding by 

appropriation and some 

industrial funding

Defense Business 

Operations Fund 

(industrial funding)

customer-supplier 

relationship

Direct funding by 

appropriation 

(Corps of Engineers 

by appropriations 

and industrial 

funding)

Infrastructure 

responsibility

Tenant relationships with 

Air Force bases.

Air Force customers not 

charged overhead

Owns and operates 

principal facilities.

Distributes all costs to 

customers through 

Defense Business 

Operations Fund

Mixed responsibility

DOD’s ability to compare the services’ laboratories and centers is obscured

by significant differences in their RDT&E infrastructure. These differences

can be divided into three categories: organization and composition,

financing, and infrastructure responsibility.

At the most fundamental organizational level, the services’ RDT&E

infrastructures vary greatly in size and composition. In the Air Force,

about 12,000 civilian and 11,000 military personnel conduct RDT&E. They

Page 26 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
Briefing Section II 

Trends in Cost, Size, and Composition of

DOD’s R&D Laboratory and T&E Center

Infrastructure

work at four laboratories that perform basic research and development in

space; aircraft; command, control, communications, and intelligence; and

human systems; as well as three distinct T&E centers and one engineering

development center. The Navy employs about 55,000 civilian and 

5,000 military personnel in 4 large warfare centers and 1 corporate

laboratory. The warfare centers are aligned with the naval systems

commands (sea, air, and space and naval warfare) and provide full

spectrum support (basic research to in-service engineering) on families of

platforms and systems. Finally, the Army’s 31 laboratories are organized

into 3 largely independent systems—the Army Research Laboratory and

research development and engineering centers of the Army Materiel

Command; Army Corps of Engineers laboratories and centers; and medical

laboratories—and employ about 27,000 civilian and 4,000 military

personnel.

Attempts to compare service laboratories and centers are made even more

difficult by differences in financing. Laboratories and centers generally

have one or two sources of financing: institutional funding (direct

appropriations from the Congress) and industrial funding (reimbursable

contracts with customers). Air Force laboratories and centers receive

mostly appropriated funds, which they complement with some

reimbursable contracts. Navy laboratory and centers operate under the

Defense Business Operations Fund and do all work under reimbursable

contracts. The Army has a hybrid of the two sources. The Army Research

Laboratory; the research, development, and engineering centers; and the

medical laboratories are primarily funded by appropriations, while the

Army Corps of Engineers laboratories are funded by 40 to 50 percent

reimbursable funds.

Institutionally and industrially funded laboratories and centers are

responsible for financing different amounts of their facility infrastructure.

Most institutionally funded laboratories, such as those in the Air Force, are

tenants on larger military bases. This host-tenant relationship generally

results in the tenant receiving reduced cost or no-cost support services,

which means customers are not charged for overhead costs. In contrast,

industrially funded laboratories and centers, such as the Navy’s, are

responsible for all operating costs, including maintaining their physical

plants and providing other necessary support services, such as human

resources, security, and accounting support. These laboratories and

centers include operating costs and overhead in their charges to

customers. The result is that the cost of a project at an institutionally

funded activity appears less than at an industrially funded activity.

Page 27 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
Briefing Section II 

Trends in Cost, Size, and Composition of

DOD’s R&D Laboratory and T&E Center

Infrastructure

GAO Divergent Trends in Three Budget Accounts 

for DOD and Service Laboratories/Centers

1990 1991 1992 1993 1994

0

5,000

10,000

15,000

20,000

25,000

Laboratories & centers

1990 1991 1992 1993 1994

0

50,000

100,000

150,000

200,000

250,000

Constant 1996 dollars in millions

DOD

FY FY

Note: Three budget accounts are RDT&E, O&M, and Procurement.

Sources: DOD National Defense Budget Estimates for fiscal year 1996 and DOD in-house RDT&E

activities management analysis reports for fiscal years 1990 to 1994.

Page 28 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
Briefing Section II 

Trends in Cost, Size, and Composition of

DOD’s R&D Laboratory and T&E Center

Infrastructure

As presented in DOD’s in-house RDT&E activities management analysis

reports, the funding sent through laboratories and centers for work done

in-house and outsourced is the sum of total obligational authority2

 from

four funding categories: RDT&E, operations and maintenance (O&M),

procurement, and other. Trends in RDT&E, O&M, and procurement can be

compared for laboratories/centers and for DOD as a whole. The sum of

these three categories for DOD decreased by about 27 percent, from

$242.0 billion in fiscal year 1990 to $177.6 billion in fiscal year 1994. In

contrast, service laboratory and center funding for the same categories

increased about 38 percent, from approximately $14.0 billion to

$19.3 billion over the same period. Including the other funding category

increased the total funding for service laboratories and centers in fiscal

year 1994 to more than $22 billion.

According to officials in the Office of the Director, Defense Research and

Engineering, the rise in the laboratories’ and centers’ O&M and

procurement accounts was due largely to the Navy’s reorganization of its

RDT&E establishment into warfare centers and the services’ implementation

of Defense Management Review Directive 922, dated January 2, 1992.

Under this directive, the laboratories and centers took on added

responsibilities in logistics and program management areas. As a result,

according to DOD officials, the laboratories serve as conduits from program

offices to private industry for roughly 50 percent of the $22 billion spent

annually. In addition, DOD officials said that the laboratory personnel are

being cut 5 percent annually (over 30,000 people) through fiscal year 2001

to meet Defense Planning Guidance requirements.

DOD officials also stated that due to reporting inconsistencies by the

services, funding authority granted to one service and then passed through

to another service under reimbursable contracts may be reported by both

services in DOD’s in-house RDT&E activities management analysis reports.

Thus, the officials believe the increases represent an undefined level of

“double counting,” which they were unable to document during our

review.

2

Obligational authority is the sum of (1) budget authority provided for a given fiscal year,

(2) unobligated balances of amounts brought forward from prior years, (3) amounts of offsetting

collections to be credited to specific funds or accounts during that year, and (4) transfers between

funds and accounts. The balance of obligational authority is an amount carried over from one year to

the next because not all obligational authority that becomes available in a fiscal year is obligated and

paid out in that same year.

Page 29 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
Briefing Section II 

Trends in Cost, Size, and Composition of

DOD’s R&D Laboratory and T&E Center

Infrastructure

GAO Trends in Laboratory Total Obligational 

Authority

1990 1991 1992 1993 1994

0

5,000

10,000

15,000

20,000

25,000

Constant 1996 dollars in millions

RDT&E Procurement O&M Other

FY

Source: DOD in-house RDT&E activities management analysis reports for fiscal years 1990 to

1994.

Page 30 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
Briefing Section II 

Trends in Cost, Size, and Composition of

DOD’s R&D Laboratory and T&E Center

Infrastructure

A breakout of laboratory and center funding trends reveals that

procurement, O&M, and other funding categories each have increased for

fiscal years 1990 to 1994. Procurement has increased 126 percent, from

about $2.3 billion to $5.2 billion; O&M has increased 88 percent, from about

$1.6 billion to $3.0 billion; and other has increased 78 percent, from about

$1.8 billion to $3.2 billion. However, RDT&E funding has remained relatively

constant, increasing only 11 percent, from about $10.0 billion to

$11.1 billion.

Page 31 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
Briefing Section II 

Trends in Cost, Size, and Composition of

DOD’s R&D Laboratory and T&E Center

Infrastructure

GAO Breakout of Laboratory and Center 

RDT&E Funding 

Non-DOD/other

Operational syst dev

Eng mfg devpt

Testing

Management support

Science & technology

012345

RDT&E research categories

Constant 1996 dollars in billions

Army Air Force Navy

Source: Department of Defense In-House RDT&E Activities Management Analysis Report for

Fiscal Year 1994.

Page 32 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
Briefing Section II 

Trends in Cost, Size, and Composition of

DOD’s R&D Laboratory and T&E Center

Infrastructure

The RDT&E funding category is about 50 percent of all laboratory and

center funding. Its budget activities can be broken out into eight research

categories: basic research; exploratory development (applied research);

advanced technology development; demonstration and validation, also

known as testing; engineering and manufacturing development;

management support; operational systems development (budget account

categories 6.1 through 6.7, respectively); and non-DOD/other. The first three

categories combined can be defined as science and technology.

In fiscal year 1994, the two largest segments of RDT&E funding were science

and technology and management support. Also, the sum of RDT&E

management support, O&M, and other—funding categories that contribute

to supporting the RDT&E infrastructure—were about 38 percent of all

laboratory and center funding.

Page 33 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
Briefing Section II 

Trends in Cost, Size, and Composition of

DOD’s R&D Laboratory and T&E Center

Infrastructure

GAO Percentage of Total Laboratory Funding 

Dollars Outsourced

Army Air Force Navy

0

10

20

30

40

50

60

70

Percent

Fiscal year 1991 1992 1993 1994

Source: DOD in-house RDT&E activities management analysis reports for fiscal years 1991 to

1994.

Page 34 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
Briefing Section II 

Trends in Cost, Size, and Composition of

DOD’s R&D Laboratory and T&E Center

Infrastructure

Service laboratories and centers increasingly are dependent on private

sector laboratory infrastructure. From fiscal years 1991 to 1994, defense

laboratories and centers consistently outsourced more than 50 percent of

their total funding dollars. During that time, they increased the dollar

amount of their outsourced funding by about 46 percent, from

approximately $8.4 billion to $12.3 billion.

Of the three services, the Air Force outsourced the largest percentage of

its laboratory and center funding in fiscal year 1994 (about 65 percent).

However, the Navy not only outsourced the largest dollar amount of

funding ($6.6 billion), but also had the largest increase (about 106 percent

from about $3.2 billion in fiscal year 1991 to about $6.6 billion in fiscal year

1994). According to DOD officials, these increases are due largely to the

Navy’s reorganization of its RDT&E establishment into warfare centers.

The R&D laboratory and T&E center infrastructure encompasses more than

the military facilities themselves; it includes an established private sector

infrastructure on which the laboratories are dependent. DOD officials said

that one advantage of using private contractors is the ability to shed

overhead structure as technical requirements or funding resources change

over time. In addition, it is current DOD policy to outsource DOD functions

or activities whenever reasonable and possible.

Page 35 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
Appendix I 

DOD Focus on Prior Laboratory Studies

Currently, DOD is focusing its efforts and committing its resources to

implementing prior recommendations contained in the following studies.

Also, DOD is implementing presidential and congressional direction,

discussed below, to reduce further its laboratory infrastructure.

Report of the Defense Science Board 1987 Summer Study on Technology

Base Management (Defense Science Board, 1987). This study serves as a

baseline study, since DOD is still implementing its recommendations. The

Defense Science Board was tasked by the Under Secretary of Defense for

Acquisition to evaluate the management of DOD’s technology base and to

make recommendations to improve management’s effectiveness and

efficiency. The study addressed (1) the best DOD-wide management

structure and decision-making process to identify and emphasize

technology areas likely to be critical to defense capabilities in the future;

(2) more effective coordination of advanced technology development

activities within and between the services and their laboratories, the

defense agencies, the Strategic Defense Initiative Organization, national

laboratories, industry, the university community, and our allies; (3) the

establishment of “critical mass” in terms of funding, facilities, and human

resources for technology areas having the greatest potential; and (4) the

transition of emerging technologies to military systems.

Long-Term Modernization of Research, Development, Test and Evaluation

(RDT&E) Facilities (Institute for Defense Analyses, 1991). The Institute for

Defense Analyses was requested to provide the Deputy Director, Defense

Research and Engineering, with analyses and recommendations to

respond to a congressional committee request for DOD to develop a

long-term modernization plan for RDT&E facilities. The report found that

the average age of real property used by DOD research activities is older

than the average ages of similar structures in other parts of the

government and in industry. It determined the age and value of DOD

research facilities and calculated the renewal period of investment, which

was far in excess of that in other parts of government or industry. Also, it

analyzed military construction needs at RDT&E activities among the military

services. Finally, the report recommended the establishment of a structure

to provide oversight of laboratory capabilities and improvements and a

process to delineate long-range planning.

Base Realignments and Closures: Report of the Defense Secretary’s

Commission (1988). To ensure that scarce DOD resources would be

devoted to the most pressing operational and investment requirements

rather than maintaining unneeded property, facilities, or overhead, the

Page 36 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
Appendix I 

DOD Focus on Prior Laboratory Studies

Secretary of Defense chartered the 1988 Commission. The 1988

Commission sought to close obsolete military bases and bring the base

structure in line with the declining force structure. Legislation passed in

late 1988 provided relief from statutory impediments to closures, such as a

partial exemption from the National Environmental Policy Act of 1969,

delegation of property management and disposal authority, and an

expedited process for congressional review of BRAC recommendations. The

1988 Commission recommended the closure of 86 military facilities and

the realignment of 59 others, with an estimated savings of $693.6 million

annually. The 1988 Commission’s recommendations represented a

reduction of approximately 3 percent of the domestic base structure.

1991 Report to the President (Defense Base Closure and Realignment

Commission, 1991). The 1991 Commission recommended the closure of 

34 bases and the realignment of 48 others. These actions are expected to

generate an estimated net savings of $2.3 billion between fiscal years 1992

and 1997 and recurring savings of $1.5 billion annually after a one-time

cost of $4.1 billion. The 1991 Commission’s recommendations represented

a reduction of approximately 5.4 percent of the domestic base structure.

1993 Report to the President (Defense Base Closure and Realignment

Commission, 1993). The 1993 Commission recommended the closure of

130 bases and the realignment of 45 others. Estimated net savings from

fiscal years 1994 to 1999 were approximately $3.8 billion after one-time

costs of approximately $7.4 billion. The savings from these actions are

estimated to total $2.3 billion annually. The approved closures and

realignments represent a further reduction of 6.2 percent of the domestic

base structure.

1995 Report to the President (Defense Base Closure and Realignment

Commission, 1995). The 1995 Commission recommended the closure,

realignment, redirection, disestablishment, and relocation of 132 bases.

These actions are expected to generate an annual savings of $1.6 billion

after one-time costs of approximately $3.6 billion. Over the next 20 years,

the total savings are expected to be approximately $19.3 billion. The 1995

Commission recommendations represent a reduction of approximately

6 percent of the domestic base structure.

Interagency Federal Laboratory Review Final Report (National Science

and Technology Council, Office of Science and Technology Policy,

Executive Office of the President, 1995). A Presidential Review

Directive/NSTC-1, dated May 5, 1994, established the Interagency Federal

Page 37 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
Appendix I 

DOD Focus on Prior Laboratory Studies

Laboratory Review, which focused on the federal government’s three

largest laboratory systems: DOD, the Department of Energy, and the

National Aeronautics and Space Administration. All of these laboratory

systems are reevaluating their roles as a result of the end of the Cold War

and the National Performance Review of 1993. Because the future of these

three major laboratory systems has important implications for the nation’s

entire research enterprise, the Council initiated this review, under the

authority of the Presidential Review Directive, to guide, build upon, and

integrate the individual agency reviews. The core purpose of this review

was to evaluate the laboratories’ effectiveness in meeting

Council-identified areas of evolving national need and to identify ways the

laboratories could effectively and efficiently contribute to meeting these

needs.

Five-Year Plan for Consolidation of Defense Laboratories and Test and

Evaluation Centers (Pub. L. No. 104-106, §277, 110 Stat. 186 (1996)).

Section 277 of the National Defense Authorization Act for Fiscal Year 1996

requires the Secretary of Defense, acting through the Vice Chief of Staff of

the Army, the Vice Chief of Naval Operations, and the Vice Chief of Staff of

the Air Force (in their roles as Test and Evaluation Executive Agent Board

of Directors) to develop a 5-year plan to consolidate and restructure DOD

laboratories and T&E centers. The Secretary must consider, at a minimum,

(1) the consolidation of common support functions; (2) the extent to

which any military construction, acquisition of equipment, or

modernization of equipment is planned at the laboratories and centers;

(3) the encroachment on the laboratories and centers by residential and

industrial expansion; (4) the total cost to the federal government of

continuing to operate the laboratories and centers; (5) the cost savings

and program effectiveness of locating laboratories and centers at the same

sites; (6) any loss of expertise resulting from the consolidations; and

(7) the necessity of any additional legislation to enable the Secretary to

accomplish the downsizing and consolidation of the laboratories and

centers.

Page 38 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
Appendix II 

Major Contributors to This Report

National Security and

International Affairs

Division, Washington,

D.C.

Stacy Edwards

James L. Morrison

Mark A. Pross

Leslie E. Schafer

Clifton E. Spruill

Los Angeles Field

Office

Benjamin H. Mannen

(707146) Page 39 GAO/NSIAD-96-221BR DOD RDT&E Infrastucture
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